Cablevision to buy Sundance Channel for $496 mln

By Yinka Adegoke

NEW YORK (Reuters) - Cablevision Systems Corp (CVC.N) said on Wednesday it will buy Robert Redford's Sundance Channel to add the independent film network to its Rainbow Media portfolio of cable movie channels.

Sundance, owned by General Electric Co's (GE.N) NBC Universal, CBS Corp's (CBS.N) Showtime Networks and entities controlled by Redford, is valued at $496 million under the terms of the cash-and-share deal agreed with Cablevision.

In return for 100 percent of Sundance, New York-based Cablevision would offer about 12.7 million shares of GE common stock and could add an unspecified amount of cash to take the total value of the exchange to $496 million, depending on the value of GE shares at the deal's closing.

Cablevision's Rainbow Media unit received the GE shares as partial payment for selling the Bravo cable network to NBC in 2002.

"I think it's a wise move," said David Joyce, an analyst at Miller Tabak, pointing to the recent rise in valuations for cable TV networks due to their attractive combination of affiliate fees and advertising revenue streams.

"I'm a little surprised that neither NBC or CBS tried to take full control of Sundance. Everyone would like to own cable networks right now," said Joyce.

NBC bought Oxygen Media for $925 million last October and Landmark Communications' Weather Channel currently is on the market for between $3 billion to $4 billion.

Sundance was launched in 1996 by director and actor Robert Redford. It reaches nearly 30 million subscribers with a range of original programming, including documentaries.

Cablevision's Rainbow Media unit, which also houses cable networks AMC, IFC and WE, said Redford would remain involved with the channel following the closing of the deal.

"The challenges facing an independent programmer are profound," Sundance Channel President and CEO Larry Aidem said in a statement, adding that Rainbow has the programming and distribution network needed for the long term.

Wall Street analysts said using GE shares in what would be a tax-free exchange was a good move by Cablevision, which is under pressure to grow beyond its maturing cable service business as it faces stiffer competition from Verizon Communications Inc (VZ.N) in the Long Island, New York area.

NBC owns around 57 percent of Sundance, CBS owns 37 percent and Redford the remaining 6 percent.

Based on closing prices Wednesday, 12.7 million GE shares would be worth about $414 million. If the deal was completed today it would require $82 million in cash to bring the total payoff to $496 million.

"They're getting these assets at a reasonable price," said Craig Moffett, analyst at Sanford Bernstein.

(Click here to see Reuters MediaFile blog)

(Reporting by Yinka Adegoke; editing by Jeffrey Benkoe and Tim Dobbyn)